Tribunal advises PQA to pay leviable duty/tax on temporary import of three tugs

KARACHI: The Customs Appellate Tribunal has rejected the appeal of M/s Port Qasim Authority against demand created by Directorate General Intelligence & Investigation – FBR.
M/s Port Qasim Authority is now liable to pay Rs591.08 million of duty/taxes leviable on three tugs temporarily imported by the Authority.
According to details as reported by the Directorate General Intelligence and Investigation-FBR a credible information was received by them that Port Qasim Authority temporarily imported three units of used Tugs Namely Sharief Pilot, Sharief Verve and Sharief Alert along with all machinery and fittings from M/s Global Marine Services, Sharjah.
The said Tugs were required to be cleared from the Customs by filing of proper Goods Declarations against payment of 20 percent duty/taxes in cash and submission of bank guarantees for remaining 80 percent amount.
But PQA neither filed the Goods Declarations, within stipulated period of fifteen days of arrival of the goods for their clearance from the Customs nor deposited 20 percent duty taxes in cash i.e. Rs230.813 million and bank guarantees of remaining 80 percent amount of leviable duty/taxes i.e. Rs360.269 million.
M/s PQA submitted that three tugs were imported on the basis of lease agreement with M/s Global Marine Services and as per issued to PQA by Deputy Secretary, Ports and Shipping, they are government property and exempt from custom duty and sales taxes. Besides, the imported tugs are exempted from customs duty, Sales Tax and Income Tax, under SRO 567(1)/2006 and SRO 551(I)/2008.
The Adjudication observed that tugs were temporarily imported by PQA. The said Tugs were required to be cleared from the Customs by filing of proper Goods Declarations against payment of 20 percent duty/taxes in cash and submission of bank guarantees for remaining 80 percent amount.
But, M/s PQA did not file the Goods Declarations, within stipulated period of fifteen days of arrival of the goods besides neither the GDs were got processed or leviable duty/taxes were deposited by Port Qasim Authority. Moreover, three Tugs were brought in use by PQA without completion of GDs/out of charged by customs.
The Adjudication observed that simply hired/chartered three tugs have not been purchased but temporarily imported by PQA, the same cannot be termed as ships belongings to government of Pakistan. Further, Ministry of Ports and Shipping is not the appropriate authority to declare or clarify that import duty/tax leviable on any goods are exempted.
The Adjudication ordered to recover the amount of total duty/tax amounting Rs591.08 million. A penalty of Rs10 million is also imposed on PQA.
M/s PQA approached Customs Appellate Tribunal being dissatisfied with the order-in-original that the impugned order is void ab initio, against the principles of natural justice as the order is based on alleged telephonic conversation with Merchant Marine Department and, without confronting and giving opportunity to the appellant to give comments on the same.
PQA said while holding that the appellant is owner of the tugs and has knowingly and willfully tried to evade duty and taxes by the claiming inadmissible exemption of duty and taxes, the Collector failed to apply judicial mind when held that the Tugs were not bare boat chartered by PQA, but failed to appreciate that if the Tugs were not chartered on bare boat basis then the appellant has no, liability to pay custom duty and other taxes.
PQA noted the said tugs were hired on time charter for assistance and smooth flow of inward and outward movement of ships in the channel of the Port Qasim not imported by the PQA and as such there is no question of imposing import duty in respect of the said tugs.
Moreover, the said tugs were foreign flag vessels and PQA is not the owner or the buyer or the agent or the principal of the tugs as such no duty/tax or penalties can be imposed.
The Directorate responded that PQA hired/chartered three used tugs from M/s Global Marine Services, Sharjah, UAE which were, temporarily imported by them. The agreements between the owners and the appellants are simply charter and not bareboat charter as the same do not fulfill the requirements of Rule 7- Bareboat Charter Registry of the Merchant Shipping (Registration of Ships) Rules, 2002.
It added that after hearing all sides and affording full opportunity to the Authority to substantiate their contention, the order-in-original was issued.
The Tribunal noted that no goods can either be taken out of the port, terminal/customs stations/airports etc. without filing of Goods declaration and completion of procedure of assessment and payment of leviable duty and taxes thereon.
After due consideration to all aspects of the case, the Customs Appellate Tribunal rejected the application of M/s Port Qasim Authority and upheld the demand created and penalty imposed by the Customs Adjudication.